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VW Cranks Up Electric-Car Plants to Overtake Tesla's Capacity

Elisabeth Behrmann and Christoph Rauwald
VW Cranks Up Electric-Car Plants to Overtake Tesla's Capacity

(Bloomberg) -- In about a year, Volkswagen AG may catch up to Tesla Inc.’s capacity to make electric cars.

The world’s biggest automaker said Tuesday it’s building two plants in China to produce a total of 600,000 vehicles on its dedicated battery-car platform, dubbed MEB. The new factories in Anting and Foshan will open a few months after Germany’s Zwickau, which will assemble as many as 330,000 cars annually and is slated to get started by year-end.

Following through with plans to reach this level of scale will likely leave Tesla trailing behind. Its lone vehicle assembly plant operating in Fremont, California, can make about 500,000 cars. The electric-car leader expects to start output on the outskirts of Shanghai at the end of this year and produce 250,000 vehicles a year initially.

VW has little time to lose after Tesla resolved manufacturing snafus in Fremont and its battery factory near Reno, Nevada, which may start also building Model Y crossovers. While Model 3 sedan deliveries tailed off in the first quarter following a strong second half of 2018, Chief Executive Officer Elon Musk has dismissed concerns about demand and stuck to a forecast for as many as 400,000 vehicle deliveries this year.

VW plans to produce some 70 battery-powered models across its 12 auto brands by 2028 and make 22 million electric cars over the next decade. Chief Executive Officer Herbert Diess, who says alternative technologies like fuel-cell cars will struggle to compete, is helming the auto industry’s biggest effort in the transition from combustion engines costing some 30 billion euros ($34 billion).

“Volkswagen leads the competition on e-mobility,” Diess said in speech notes at the company’s annual meeting in Berlin. “As a company we’ll make a success of the electric car -- with the right products, superior underpinnings and global economies of scale.”

The carmaker, which is also considering sites for more electric-car plants, this month opened reservations for its electric ID.3 hatchback. It’s garnered more than 15,000 orders from buyers putting down 1,000-euro deposits.

VW plans to team up with Sweden’s Northvolt AB to start production in Salzgitter, Germany of battery cells for electric cars, a spokesman for the German carmaker said in Berlin. Diess said the plant located near VW’s headquarters would get almost 1 billion euros in investment and should be able to start deliveries in 2022 or 2023.

Tesla, meanwhile, is mulling a factory in Germany, Musk said in a tweet last month, after last year stating the home of BMW AG, Daimler AG and VW was the leading choice for a car and battery site in Europe.

To contact the reporters on this story: Elisabeth Behrmann in Munich at ebehrmann1@bloomberg.net;Christoph Rauwald in Frankfurt at crauwald@bloomberg.net

To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net, Craig Trudell

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